Tuesday, April 10, 2007

Publix's new pay system: High performance, smaller paycheck

Can you believe this?


Even good employees can face pay cuts in a new pay plan at Publix that includes penalties as well as rewards.

After bagging groceries at Publix for nine years, Ray O'Connor was stunned when his bosses called his work "successful" then cut his pay a quarter to $8 an hour.

"I think they just want to get rid of me," said the 75-year-old Spring Hill man who works part-time to supplement his police officer pension. "They said I wasn't improving. Improve what? I've never dealt with anything like this in my life."

Now he has trouble sleeping. He's embarrassed when peers talk about pay. Nobody mentioned it, but he wonders if it's his age. He's talking of seeing a lawyer, but not quitting "until I get this blemish off my record."

O'Connor is among the first intended consequences of a new pay plan adopted by the nation's sixth largest supermarket chain. Lakeland-based Publix Super Markets Inc. spent years creating a "Tie Pay To Performance" plan that offers penalties as well as rewards.

Mass merchants have used performance incentives for years, but they're usually tied to a store's performance and meant to foster teamwork. Publix zeroes in on each worker and adds the unconventional twist of institutionalizing disincentives - even for top performers.

"We want a customer experience the customer deserves and expects at Publix, so we are rewarding people for hard work while increasing what we pay overall," said Shannon Patten, spokeswoman for the grocer that employs 142,000 people full- and part-time in five states. "But some associates face a decrease if their performance slips."

Here's how it works. Top performers - many of whom pocketed raises two to three times and up to $1 an hour more than what they were used to getting - love it. Others are getting their standard raises. Many must resolve to work harder. In February, 19 percent of employees up for review got no raise and 4 percent took pay cuts.

Publix says the plan is working. In August, 68 percent of hourly workers got a raise. The rest were put on six-month notice they had to shape up. Six months later in February, 77 percent got reviews good enough for raises, showing more workers got the message.

It's a culture shock at a chain already named one of the nation's 100 best employers, that consistently rates tops in Consumer Reports customer service ratings, and was just named the best of 19 major retail chains rated by the University of Michigan Customer Satisfaction Index.
For years, virtually all Publix store workers could count on a modest annual raise. Not now. Semi-annual evaluations, based on supervisors' numerical ratings in 21 areas, grade workers as role model, superior, successful or two types of needs-work-to-keep-the-job. The rating is matched to a performance pay range for each job. Publix gives workers a six-month warning to improve their performance to keep their current pay rate. That goes for top-rated "role models," too.

O'Connor, for instance, was rated "successful" the past two years with all his scores above average. Yet his seniority already put him at the top of the bagger pay range. So his pay was cut.

"Before this I was rated successful at 107 points and got a raise," he recalled. "Then I got a 123 and a 114 my past two evaluations and lost money." In August his supervisor wrote he needed to offer cart carry-out to more shoppers. In February he suggested O'Connor stay busier in slow times and coach younger baggers.

Publix declines to talk specifically about O'Connor's case. But the company - which employs 4,500 people over 70, 750 over 80 and two over 90 - says it's not about age. Internal reviews of those hit with pay cuts found all age groups.

Without a union contract, no federal or Florida law stops an employer from cutting pay. "But I've never heard of a plan that docks pay," said David Szymanski, chairman of the retail studies program at Texas A&M. "If you want to get rid of somebody for performance, just counsel them out."

Studies find retail employees want plans that reward performance and prod slackers to shape up. But inflation makes being passed over for a raise a pay cut. And some experts question taking money away from low level part-timers because it's divisive and undermines teamwork.
"I've never seen a pay-for-performance plan that works because it brings the top-performing lions out to feed on everybody else," said Terri Kabachnick, a Largo retail HR consultant and author of I Quit but I Forgot to Tell You. "It's worse in supermarkets where people don't control outcomes. Their day is go here, go there, clean up this spill. If you don't get along with the manager, forget it."

Is it wise to use money as an disincentive? "Cold hard cash leaves employees feeling ... well, cold," Kabachnick said.

It's a trend that began when department stores saw pay-for-performance as a cheaper alternative to commissioned sales jobs.

"In supermarkets, however, store managers often are not as sophisticated in HR practices," said Bart Weitz, chairman of the retailing program at the University of Florida.

It's not about the money to O'Connor. He has health insurance and works fewer than 25 hours a week. So with the pay cut he's only out $3 to $5 a week. "It's the principle," he said. "It's time somebody tells these big companies to stop stepping on the little guy."

Mark Albright can be reached at albright@sptimes.com


Anonymous said...

Basing payraises on performance.

When will the madness end?

Anonymous said...

When I was a teen, I worked at Publix for 3 years. I was payed @ $4.25/hr which was the current minimum wage. I was never given an annual increase of pay.

One time I found out one of my buddies was making $4.30 an hour. I confronted the store manager and politely asked for a $0.05/hr raise to $4.30. It was like pulling teeth to get that 0.05 raise. I think he actually had to get back to me later in the week with his answer.

14 years later I now realise I spent almost the same amount on gas to drive to work, then I actually made.

Anonymous said...

you is smart

Jeff said...

When you perform at a high level, you have to continually improve. If not, then you, personally, are backsliding. You might still be way ahead of your peers, but your personal performance has declined. Thus in such an environment as Publix has established, expect either no raise or a pay cut.

And when you reach the top of your pay scale, no matter what you do, you have to expect that the outcome isn't likely to be in your favor. The only option on your end is to man-up and take a promotion. If that doesn't suit you (and I'm sure the "hero" of our story doesn't want to work at 2 AM stocking...) then you have to live with it.

As the first commenter said, "Imagine.
Basing payraises on performance.

When will the madness end?"

Not to gripe, but in nearly 7 years with my previous employer I received two 1% raises. In fact, the last one worked out to be something like 0.97%. So man up kids. It's tough all over.

Anonymous said...

This makes me think back to my last clock punching job.

They started doing the "Continual Improvement" thing that's the rage with all the big 500's.
Weekly 5 min. hates, changing everything around every 6 months tills after about 2 years you're back doing it the same way you started. etc.
The thing I imagined was if some mid. manager spoke up at a meeting to say "we tried every way possible, tracked them, kept the most efficient and can't improve anymore unless we can find "associates" that don't eat or go to the restroom.

How long do you think that person would still have a job?

Anonymous said...

I'm a department manager for Publix. I think taking away part of someones salary is a way to weed people out as they say. It is against my beliefs. Lets say an associate worked for Publix for 30 yrs, and was making top pay. A manager rated them on their evaluation as a non performer,and money was taking away from them because there not a ball of fire like they use to be. People get old you know? I thought Publix was about family and values. I think that would be a loop hole for Publix to get out of discimination law suits for getting old. Talk about taking away someones pride and dignity for all his dedicated years of service.That's wrong, the associate would no longer feel like they were worth anything or they were a value to publix. As far as the person who had money taking away from him for not asking people if they want to take their shoppin cart out to their vehicle is bullcrap. Many front service workers know almost by instinct if someone needs help, and they probably know many of the customers names more than the managers do. It's a shame that the front sevice manager does a random check to see if the bagger ask if they need help out to the car. Maybe the customer had told them before that they don't or never require help. The manager doesn't know that, so instantly checks off the little sheet they have as no. They don't consider that some customers get pissed off if your to persistant in helping them even after they have told the front service person several times they don't want any help.
Anyway, I hope I don't get fired if someone found out I wrote this.
The people up in Lakeland who make up these bright pay scale rules need to get their asses into gear and try working as a front service clerk for a week, or a few weeks, and all other positions in the store including department managers, and see what hard work and customer service is all about. They need to stop thinking about the raises their giving themselves, and start thinking about what it means to take something away from a person, not a associate, not a number, but a person who works their ass off to have their pride and dignity stripped from them because of company ignorance.

Anonymous said...

I can say without a doubt that his review was not solely about the lack of carryout. There are 21 lines on his review and even if he got a 0 on that line, he could still score role model if he was in every other way.This is a case of someone who should have been weeded out a long time ago, but somewhere along the line, they felt it was easier to just let him exist, than to have to persue the steps to terminate him. Also, He makes a big deal about his 3 so-called commendation letter he recieved in 9 years of service, but these were written at the store by a member of management and not because a customer actually called, e-mailed, or wrote the corporate offices. I have associates that get that many in 3 months let alone 9 years! He was and will always be a SLACKER!

Anonymous said...

Anon 10:22,

Valid points!

Anon 9:39,

Regarding your comment about the corporate level just thinking about their raises and not about the store level - did you not see the story in the paper (St Pete)that the President of Publix makes around $900,000 to run a multi-state corporation with almost 900 stores. Do you think as a privately held company that he could push through a much bigger pay package? Of all the CEO's that were shown in the story his pay was a reasonable ratio as compared to those CEO's that made at the lowest $3,000 an HOUR - I think that Publix has shown consistantly that they are employee foucused year after year.

I see that you forgot to mention your inventory bonus that you get over and above your weekly check for working so hard.

I think your last review may have put you in the same situation as the guy in the story and you are pissed about it.

Anonymous said...

The disparity between what management makes and what hourly employees make is huge at Publix. I worked for them for 6 years in Tampa and then later on in Atlanta making piss poor money working my ass off to make it into managment. While I was there the most any full time employee could make was $13/hour and may have been a bit higher for meat cutters. That'a a measly $27k/year. On the other hand my store manager made close to $200k/year and there were some managers in the Miami area pulling down almost a million a year.

Publix is also synomonous with nepotism. A large percentage of the people that get promoted either do so because a family member once or currently is in a position of power. The other way to get promoted is to threaten to sue based on sex or age discrimination. Very few people make it into management solely based on their work ethic let along their management skills. Managers rule by fear and this new system only makes it worse.

As a stockholder the company has brought me things I wouldn't normally have but I seriously have to question this new direction and also question this move just weeks after we voted for the new board. Not like that fucking matters either. The same family members or those that married into the family just rotate positions.

Anonymous said...

$900k could very well be $1 to the President of Publix. When you have millions of shares of stock you can live alone on the stock dividends. At $.40/share the Jenkins family. Even if they only had a measly million shares that $400k for this year.

Just take a look at some of their SEC filings lately.

Anonymous said...

Anon 9:35,

my point being they could have all those stock dividends you mention and also a pay check of $48 million a year but do not.

Anonymous said...

According to Forbes, Publix is still one of the best companies in this country to work for. I have a friend whose grandmother worked as a cashier for 20 years. When she retired, she had almost $600,000.00 in her retirement account. I also have a friend who is a financial adviser for some publix employees. He said they do very well being employees of a grocery store.

As far as nepotism goes, it's a family owned, family run business. What would you do if you owned a successful business started by your dad? Who, I might add started as a bagger for Piggly Wiggly in the 1920's.

Anon9:17, you even state: "as a stockholder, the company has brought me things I wouldn't normally have". So, what is it you want exactly?
"Very few people make it into management solely on their work ethic, let alone their management skills". New to Corporate America, are you?

Finally, Publix Family Charities gives an enormous amount of money to worthy causes. I have worked with them for the last 4 years, and have found them to be very generous.

During the 2005 hurricane season, when South Florida lost power, Publix opened their doors and allowed people to come in and take all perishables for free. They lost 60 million dollars in inventory that year.

I guess it's easier to bitch about all the wrongs done to you by an evil employer. My question is, why do you stay if you're that unhappy?

Finally, so freaking what if the Jenkins have alot of money? George Jenkins was a bag boy in a country grocery store in Macon Georgia. When the management refused to listen to his ideas about better customer service, he went to Lakeland and bought a little grocery store that he worked 18 hours a day in. Damn him and his family for reaping the rewards of all that hard work.

Anonymous said...

Thanks Momma Jenkins.
Love, George

Anonymous said...

....and the "evil" corporate giant listened to the neighborhood when it was announced that our local store would be closing. The association lobbied them to keep the store open and then when they rebuilt to put some of the style of the orignal design back - and drive by and look - they did and the store is still open!!!

They have been very generous in supporting OSHNA and the home tour.

Do you remember how well the shelves were stocked when you ran by on Easter Sunday for that forgotten glaze for the ham?? No you don't - they were the only grocery - local or national - that was closed on Easter so the associates could spend time with their families. Wow - what a missed opportunity for sales for that greedy corporate slave driving family - the Jenkins - maybe they will wise up!

BTY - Publix is employee owned - you have the option even as a part-timer to purchase stock. You will also be eligible to share in the store inventory bonuses after you work for 1,000 hours - can that be said of SweetBay or Albertsons or Pack n Sav or Sav n Pak?

If you choose to work retail grocery then Publix will give you the opportunities to advance if you choose to work for it.

If you advanced because your uncle worked there and had a strong work ethic then that's an indicator that you may fit well also. I doubt that with the growth of the past several years that is as much of an issue as in the past - if your family is big enough to have preferential treatment in over 800 stores then you should own a grocery store not be working in one!

I just had an interview last week and got it by referral - that's how it works in the real world! The cost of training and retaining an employee ain't cheap and ain't free so if you can guarantee that they will stay because a relative works with the company and does a good job then I'll interview them first any day of the week.

Anonymous said...

Anon 9:17

Bitter - table for one.......

Ask your store manager how many hours he worked last week - I'm sure it was over 60 - divide that by the salaried rate and I am sure you made more - even when you were bitchin' about working!

I know several Publix managers and they make nowhere near $200,000 and most certainly there are not managers in Miami making a million - that would be more than the District Managers make - that don't work son.

If you are that unhappy then move to another grocery for your employment - maybe you can't afford to because Publix payroll is higher that the national average for grocery chains. You most certainly will be working Easter and Christmas - ask Sweetbay.

....and no I'm not our local manager posting.

Anonymous said...

I hear Sav-a-Lot (Hillsborough) and Mega Supermarket (Nebraska) are hiring. Try those places ...

Anonymous said...

dock my pay i'll dock your mom

Anonymous said...

Anon 1:55

I'm glad you know managers who worked there. That's good for you except I DID work there. I believe I have a much better understanding of the situation having actually had first hand experience.

Quite frankly even if you do know managers and they're in the Tampa area then you still don't know shit. Bonuses are based on how much a business a store does so for example the store on Florida doesn't make shit compared to the top stores in the chain. Some stores in Miami easily do $2 million is sales a week. The store I worked at in Atlanta sometimes did $1 million in ONE day.

And yes I did leave almost 10 years ago. IT pays far better.

Anonymous said...

Anon 4:03

Since you left almost 10 years ago then you would know about the change in bonuses that limit the max bonus for store managers. And I am quite aware of how inventory bonuses are allocated.

The Publix on 56th and the one on Neptune are the highest volumne stores in the Tampa districts and often do $1MM but their managers do not make near $200,000.

And as for you knowing your shit about Publix.........our neighborhood store is located on NEBRASKA - now who don't know SHIT???

Take your sour grapes and go eat them - it's in the past - you state you have moved on so let it go.

Anonymous said...

Anon 4:03

I'm curious - how many registers does a $1 MM a day store have?

Anonymous said...

Seems like the trees are getting lost in the discussion of the forest, here.

Let us say for arguments sake that Publix's new policy is reasonable and fair. I think good arguments can be made that it is.

What no one seems to be asking, regarding the retiree worker, or for that matter, the handicapped worker, is how does this affect them? Incentive programs like these increase competition for raises which theoretically will increase performance. However, it will only increase it amongst those with the will or ability to increase their performance.

That 70 year-old retiree who just wanted a simple, low-stress job bagging groceries (BAGGING!) is now left to a series of pay cuts as his time-in-position works against him. What about people with below-normal intelligence? They can perform simple, repetitive functions well, but at some point they will be unable to compete and start losing wages.

From a purely business perspective, these people will not or can not work as hard and should go. But this is a change in the public perception of Publix which may cost them more in the end. When the least of us is cut free like this, our expectations as the shopping public will change.

As an example, when I walk into a car dealership, my defenses are set on "high" and I expect to deal with a hard-nosed, take-no-prisoners businessperson. Today, when I walk into Publix, I have more tolerance for a little fuzziness in some of the help because I know they're either there for the fun of it or they may be challenged in some way. (I just don't see a grocery bagger being in a management track so if they get a bit confused over something or want to chat a bit with me, I don't mind.) A business that hires retirees and the handicaped generally gets some slack from me, one that doesn't because they don't fit the MBA model of efficiency, gets an MBA's expectations of efficiency from me.

Anonymous said...

I love that everyone at our Publix is so freakin nice lately. If this is the reason why, then have at it!

Like the first post stated ... pay raises based on performance, imagine that!

Anonymous said...

Performance measured against your own past performance. It's evil. The very best employee can get a pay cut because while they measured better than last year, they didn't measure better enough. They worked *harder* than last year, but got a pay cut because they didn't work hard enough.

To make it worse, most of the measurements are subjective.

Talk about shooting morale in the foot.

Anonymous said...

I think we are seeing more positive changes at our Publix because of the new manager - who has been there for 6 months or so - the effects of his focus are starting to show at every level and I certainly appreciate it. It has to be harder because of the increased volumne of customers since the Albertsons has closed but yet the quality continues to rise. Notice the positive change in the deli!

I say hats off to the management of our local store.

Michelle said...

I just recently worked with a 65 yr old woman who was moonlighting at the Publix bakery so that she could pay for her husband’s medications. She came into my office about a month ago and told me of this new pay plan Publix had created. She stated she was worried that her pay would be cut because she could not keep up with the younger staff. Her point was one of management perception. The younger employees were able to keep going through the night doing extra (and that is the key. The employee must do above what their job description requires) duties, but she, an older woman who had just put in an 8 hour day at her other job, felt like it was an unfair balance.
Now with that said, she does choose to work a second job (or does she? Remember she is working at Publix to pay for her husband’s medication, that of which Medicare will not cover). As a person going into business myself, I cannot think of the employees needs before the needs of the company. Yes a happy employee makes for a strong company, but is it really fair to penalize another employee because they are not 65 and do not work another job?
I think Publix will take a lot of slack for this one, only because people who are not the strongest are the fastest to yell foul play.
Tough subject. I see the points of all sides.
I do have one request, once upon a time, we bloggers tried to refrain from profanity so that all residents of the Heights felt comfortable posting. A few slang terms here and there, no biggie. But the F bomb? It's just not necessary.
And I don't want to here anyone say anything about me being too prissy. That's just a lame call.

Anonymous said...

As a people, should we be judged first on how we treat the strong or the weak?

Perhaps the weak are the first to yell "foul play" because they are the first to be harmed by a "let the strong survive" atmosphere.

Life is harsh and businesses aren't in the social welfare arena. But here we have an elderly woman working two jobs to keep her husband alive. One way or another, we as a society will pay for this--either through an acceptable amount of inefficiency or through higher taxes. Publix will pay through the wallet after a terrible backlash as more of the weak come forward with their personal stories.

I understand why Publix chooses to do this. It is surely their right. But there will be a cost.

Anonymous said...

...and then we need to look at the fact that Publix was more than willing and able to hire a 65 year old woman regardless of the reason she is working there.

Agism is all too real in our society and many people are concerned about finding employment after being laid off after the age of 50 so I appreciate the fact that this lady had an opportunity to work at Publix.

Hope that option is there when I need to cover my medical expenses.

I would suggest that she talk with her department manager and her store manager regarding her concerns with this policy. If she doesn't then how willl they be aware of her concerns?

Anonymous said...

and its not just Publix but all companies with stock are driven to provide a return for their shareholders - society demands a great return on every investment - where does it end? It creates a vicious cycle.

How many shareholders of the majority would really care (when it comes down to their wallet) why this lady needs to work a second job if it is going to negatively impact thier return on investment?

Anonymous said...

I've read back through the posts and I can't find where anybody uses the f-bomb. Another thread maybe?

Anonymous said...

Publix is an employee-owned company. That describes the stock holders. Though part-time employees usually don't get the opportunity to purchase.

Jeff Harmon said...

I just wanted to post a note since someone told me that another person is posting under the name of Jeff. I've changed my posting name to avoid confusion.

As far as this topic, I think a business should be allowed to try different things. I always take these types of stories with a grain of salt and this story seems to be what I would call news editorializing. I seriously doubt that Publix, in this tight job market, would do anything to hurt their retention or to alienate seniors who make up a substantial size of their work force.

If it so happens that this is bad policy, they'll pay for it. Grocery stores operate on a very thin margin. A loss of market share or an increase in operating cost of a few percentage points can be devastating to a chain.

Miche11e said...

The F bomb was used on Anon 4/11/2007 9:17 post.